Movies

Multiplex operators post weak recovery in FY’10

The multiplex operators were up against the wall in FY’10. The first quarter was gobbled by a bitter row with the film producers, freezing fresh movie content from the Bollywood studios. Revenues went for a toss as they tried to source alternate content and tapped regional language movies.

The bruise didn’t disappear in a hurry as the revenue-share arrangement increased their content costs. The release window shortened as film producers had to find space in the clutter. The situation worsened as most of the movies bombed at the box office.

Corrective measures were taken and the major players hiked ticket prices while their expenses also deepened. Revenue for the fiscal jumped but operating profit took a knock.

Revenue soars

The combined turnover of the five listed cinema exhibitors stood at Rs 13.73 billion in FY’10, up 21.47 per cent over the earlier year. The major reason was hike in the ticket prices and some blockbuster movies in between (like 3Idiots, Ajab Prem Ki Gajab Kahani etc).

Reliance Mediaworks, Fame India and Cinemax saw maximum growth in revenues, jumping 39.5 per cent, 28.7 per cent and 25 per cent for each of them. Inox Leisure saw a moderate 12.6 per cent growth, while PVR had a measly 3.2 per cent increase in its income.

Higher expenses as distributor payout increases

Multiplex operators had to cough out more to the film distributors due to the new revenue share agreement.

Though the companies kept control over personnel costs, their interests in organic and inorganic growth led them to invest to build or acquire properties. This resulted in increase in expenses.

Expenses in the fiscal stood at Rs 13.59 billion, up 24 per cent, from Rs 10.98 billion in FY09. (Disclaimer: All expenses figure are on approximate basis barring PVR, as the companies have not given the expenses for the exhibition segment separately.).

Fame India, Reliance MediaWorks and Cinemax had seen over 30 per cent increase in their expenses during the fiscal, compared to the year-ago period.

Inox saw a 16.5 per cent rise in expenses over the year-ago period, while PVR kept the expenses under control with just over one per cent increase over the earlier year.

At the operational level, all the exhibitors had a bad year as between the two fiscals, their profit narrowed by 58.3 per cent in FY’10 over the year-ago period. The FY’10 operating profit stood at Rs 179.09 million as compared to operating profit of Rs 429.69 million.

The companies who suffered the most were Fame India (down 80.3%), and Cinemax (down 64.07%). However, Reliance MediaWorks, which had suffered an operating loss from the exhibition sector during FY’09 (Rs 454.56 million), increased the losses by nine per cent to Rs 495.37 million in the fiscal 2009-10.

The cinema exhibitors are expected to put up a better show in FY’11 with an increase in ticket prices and, hopefully, more successful movies.